Tax relief on R&D spending raised after George Osborne says research ‘absolutely central to Britain’s economic future’
The government has increased research and development tax relief in a boost to UK-based manufacturers and science companies.
In his budget speech George Osborne said research and development was “absolutely central to Britain’s economic future” and raised the relief from 9.1% of R&D expenditure to 10%.
Martin Hook, the managing director of research and development tax specialists Alma Consulting, said the new R&D expenditure credit and forthcoming tax break for inventions showed that the UK was a “competitive place for innovative, cutting-edge businesses to call home”.
Hook said: “The surprising increase from 9.1% to 10% for R&D expenditure credit is extremely welcome since it represents a real-terms benefit over the existing R&D tax relief. This is an increase in generosity of R&D reliefs for large companies, which has not occurred since 2008.”
Carmen Aquerreta, the head of R&D at Deloitte, said the expenditure credit would provide £1.1bn worth of tax relief to innovative companies over five years.
“This, together with the patent box relief that comes into effect from April this year, as well as other measures such as the £2.1bn relief for the aerospace industry announced this week, provides a strong package of support for innovation in the UK and a boost to global competitiveness.”
However, Sir Paul Nurse, the president of the Royal Society, said the government was still not doing enough to support British research and development.
“An increase in R&D tax credits is good news, but the sad reality is that the government only spends 0.57% of GDP on R&D; to keep pace with other key countries this should be closer to 0.8%. Our businesses also lack ambition, with the combined public and private sector spend on R&D being only 1.79% of GDP when countries we are competing with are spending around 4%.”